Insurance Coverage and Bad Faith

Florida 4th DCA Reiterates Insurer’s Negligence Not Enough to Sustain Bad Faith Claim

Florida 4th DCA Reiterates Insurer’s Negligence Not Enough to Sustain Bad Faith Claim

Directs Judgment to be Entered in Favor of Insurer

In GEICO v. Harvey, (Fla. 4th DCA Jan. 4, 2017), Florida’s Fourth District Court of Appeal held that the trial court erred in denying the insurer’s motion for directed verdict on the insured’s bad faith claim. In doing so, the Fourth District reminded courts and litigants that an insurer’s mere negligence is handling a claim is insufficient to support a finding of bad faith.

In Harvey, the insured was involved in an automobile accident resulting in the death of the other driver. The insured’s policy with GEICO provided $100,000 in coverage. Following an $8.47 million judgment against the insured in the underlying automobile negligence suit, the insured brought a bad faith claim against GEICO. The jury found in favor of the insured, with the trial court denying GEICO’s motion for directed verdict and subsequent motion for judgment notwithstanding the verdict.

In evaluating whether GEICO acted in bad faith, the Fourth District noted that the “totality of the circumstances” must be considered in light of the factors set forth in the seminal bad faith case of Boston Old Colony Insurance Co. v. Gutierrez, 386 So.2d 783, 785 (Fla. 1980). The Fourth District in turn examined each of these factors in the context of the facts presented at trial and concluded that “there was no factual basis to sustain the bad faith judgment.” These facts included promptly notifying the insured of the possibility of an excess judgment and the unconditional tender of policy limits 9 days after the accident. Based upon these facts and others, the Fourth District remanded the case with instructions to enter judgment in favor of the insurer.

Notably, while the Fourth District found insufficient evidence to sustain a bad faith claim, the court nevertheless recognized that there were in fact deficiencies in GEICO’s claims handling. Specifically, the Fourth District noted that GEICO’s adjuster failed to relay information to the Estate regarding when the insured and his counsel would be available to provide a statement previously requested by the Estate, with testimony presented that the Estate would not have filed suit had the statement been provided. There was also evidence that the adjuster had received some deficient performance reviews and at times had difficulty managing her workload.

The Fourth District pointed out however, that: “[N]egligence alone is insufficient to sustain a bad faith award. An insurer’s imperfect handling of a claim does not, by itself, equate to bad faith; the essence of a bad faith claim is that the insurer put its own interests before that of the insured.” The mere fact that “GEICO could have acted more efficiently in handling the insured’s claim” and could have perhaps “improved its claim process” the facts did not demonstrate bad faith.

The Fourth District also noted in this case that the insured was aware that the Estate had requested a statement and did nothing to facilitate that request despite having the assistance of personal counsel. Pointing to that conduct, the court stated that in addition to bad faith conduct on the part of the insurer, the insurer’s bad faith must have also caused the excess judgment; “where the insured’s own actions or inactions result, at least in part, in an excess judgment, the insurer cannot be liable for bad faith.”

It is, to say the least, rare for a Florida state court to conclude, as a matter of law, that an insurer did not act in bad faith. Harvey provides support, however, that judgment as a matter of law is appropriate in some circumstances, even if claims handling deficiencies exist. As further demonstrated by Harvey, an insurer has an even greater chance of success where the insured’s own conduct hinders the settlement process.